Software Futures' parent company, Fidentia, has been placed under curatorship by the High Court, pending the outcome of an investigation into the management of investors' funds.
The curatorship, which affects Fidentia's financial service businesses, is the latest blow to Software Futures, which has recently been dogged by mismanagement.
In 1998, Software Futures was acquired by Computer Configurations Holdings and renamed to CCH Software Development. Two years later, MGX Group acquired the CCH Group and, with it, CCH Software Development, resulting in a name change back to Software Futures.
In 2003, Fidentia, then Brown Brother Holdings, acquired a 49% interest in Software Futures, while Kopano Ke Matla, the investment arm of union body Cosatu, acquired a 51% interest. The total value of the sale was R20 million. Last year, Fidentia bought out the 51% interest.
Curator Dines Gihwala says he will investigate every aspect of Fidentia and allegations that investors' money was mismanaged. However, until he has a clear picture of what is going on, it will be "business as usual" at the company, he adds.
Gihwala is confident the matter will be sorted out, and investors' money retrieved. Speaking on behalf of Software Futures, Norman Gasa says the company will continue running as usual and the curator wants all staff to remain on board. He adds the curator intends ensuring all Fidentia's entities keep running to protect these investments.
Fidentia, which also acts as a private equity firm, will be investigated to trace where investors' money has been invested, and to recover these funds, explains Financial Services Board (FSB) deputy executive officer Gerry Anderson.
The FSB approached the court for the order. Anderson says the investments, through Fidentia Asset Management, are apparently in companies and property, extending the investigation to subsidiary firms.
Fidentia administers several funds and has sponsored regional sports teams. It has several subsidiaries, including People Futures, which recruits IT professionals for the ICT, financial and retail sectors. Fidentia also owns Automated Outsourcing Services, a financial management firm.
Ring fences
A lawyer, who observed yesterday's proceedings between Fidentia and the FSB, says Software Futures' relationship with the troubled asset management firm did not appear to be part of the court discussions. He believes it is unlikely the software and services company will be affected in the short-term.
The lawyer, who did not want to be named, says it was a sizeable application, with a large amount of papers filed, and Software Futures was not central to the issue.
"A lot will depend on what the Fidentia curator's plans are and if Software Futures owes Fidentia any money and just how much of it is recoverable," he says.
The lawyer says legal ring fences are usually put in place to protect companies and their subsidiaries from such cases through the separation of legal persona - meaning each company is a legal entity on its own.
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